5 reasons to review your credit before expanding your business
A financially healthy business is a happy business, which is why maintaining good credit is so important.
Whether you want to expand your business or apply for another business loan, a solid credit score is the first step.
Here are just a few reasons a healthy credit score is so important to your small business:
As a business owner, it's important for your business to be considered valuable and creditworthy. By maintaining a healthy credit score, you can ensure your business is attractive to a number of different parties in the business world.
For example, if you're looking for investors or private business partners, a good credit score will make it easier to attract more investment opportunities.
Likewise, if you're looking to secure a loan from a bank or other financial institution, a healthy credit score is heavily considered during lending process.
More Lending Power
Speaking of securing a business loan, your business can increase its credit capacity greatly just by maintaining a healthy credit score.
As the following article looks at, considering there are 5 ways your good credit can go bad, maintaining a healthy business credit track record is extremely important.
Whether you want to increase your line of credit with the bank or with your credit card provider, good business credit opens the door for larger credit capacities.
When you're able to rely on your business for credit, it also eliminates the need to involve your personal finances.
Personal Lending Protection
Protecting your personal credit score is important.
If your personal credit score drops, it will not only jeopardize your business, but your personal finances as well. That's why you need to do all you can to build and rely on your business credit.
With business credit stability, you can take your personal finances completely out of the equation.
When accepting your first business loan, lenders usually take your personal credit history into consideration when making their decision. This is perfectly fine; but start building a business line of credit as soon as possible.
Once your business is up and running and you have one to two years of business credit history built, remove your personal credit from your business. This includes making sure your personal credit score isn't periodically checked due to your business activities.
Healthy credit is beneficial to your business in itself, but it can also be advantageous when it comes to your business relationships.
When vendors, partners, investors, and clients see your business has a healthy credit history, they will be more likely to do business with you. It's that simple.
Good Credit Tips
Making sure you pay all of your credit cards, loans, and other business-related bills on time will help you maintain a healthy credit. With that said, it's also wise to monitor your business credit score regularly.
Checking your credit score is free, it doesn't negatively affect your score like hard inquiries do, and it will help protect your business from fraudulent crediting activities and mistakes.
Finally, if you notice a drastic decrease in your credit score, make sure you contact your credit bureau immediately.
From increased credit capacities to business value, it's plain to see why your business's credit score is so important.
About the Author: Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including credit reports and business finances.